Legal Question in Elder Law in Massachusetts

Re: Life Estate

The parents enjoy the exemption on the capital gain; however, the son does not because it has not been his principal residence -- he will need to pay capital gains tax on his share. The division of the proceeds between the life tenants and the remainderman is based on actuarial tables put out by the IRS -- it is NOT 50/50. It is important to note that under the current tax law, if the sale does not occur until after the death of both parents, the capital gains tax which would be paid by the son would be based on the value of the property as of the date of the death of the second parent (or alternately, 6 months after that date).

I would not put the house on the market before speaking with an attorney or an accountant who can calculate the estimated division and determine the tax implications.

Please feel free to contact me if I can be of assistance.

Re: Life Estate

The parents are entitled to the Exemption. However the split is allocated based on the age of the parents now according to a specific table based on a 110 year life expectancy. The son will have to pay a capital gain on his portion of the property.

I would speak to an attorney before placing the home on the market. Please feel free to contact me if you have more questions.